HONG KONG (Reuters) - China Evergrande Group (3333.HK) on Monday said it aimed to break into the world’s top 100 companies by revenue within three years, a goal the Chinese property developer said required a 60 percent jump in sales.
Evergrande, currently China’s third-biggest developer by sales, also said it aimed to grow assets by 70 percent by 2020, after earlier in the day reporting record core profit for 2017.
Chinese developers have been widely tipped to book best-ever annual profit as industry consolidation has brought economies of scale that have helped minimize the impact of government steps aimed at slowing the pace of property price rises.
At Evergrande, 2017 brought restructuring, fundraising and deleveraging. Record sales and high-interest debt redemption saw the developer end the year with core profit - which excludes valuation gains - of 40.51 billion yuan ($6.46 billion), almost 50 percent over analysts’ consensus estimate.
After announcing the result, Evergrande said it now targets sales of 800 billion yuan and assets of 3 trillion yuan by 2020.
“To reach the 2020 sales target means we will need to grow 100 billion yuan each year, which is to grow scale by 15 percent, and we need a matching land bank,” Chairman Hui Ka Yan said at an earnings briefing, against a backdrop reading “New Evergrande, New Starting Point, New Strategy, New Blueprint”.
“That’s why we didn’t reduce our land bank last year as we initially said we would - otherwise we wouldn’t achieve 800 billion yuan in sales.”
Evergrande also posted a 110 percent surge in 2017 net profit and 47 percent increase in revenue. Total borrowings rose 37 percent, though its net gearing ratio fell to 184 percent from 432 percent a year earlier.
The developer is currently planning a so-called backdoor listing in China, where valuations are usually higher than in Hong Kong, by injecting almost all of its property assets held by Hengda Real Estate Group Co Ltd into Shenzhen Real Estate (000029.SZ).
Hui did not comment on whether the listing could be completed this year, but said the developer is actively in talks with regulators and that talks were smooth.
Earlier on Monday, state-owned China Overseas Land & Investment Ltd (0688.HK) said its 2017 core profit rose 9.2 percent, lagging analyst estimates.
($1 = 6.2752 Chinese yuan renminbi)
Reporting by Clare Jim;Editing by Christopher Cushing